As ITM Retains Net Income, Silver Lining Emerges

18 Aug 2016 09:52

With intensive efficiency in the first place, PT Indo Tambangraya Megah Tbk. has managed to book positive performance in the first half year of 2016 amidst prolonged weak coal price in the market. The good news is that all global coal indexes have seen a significant rising trend.

The average coal price in the first half of 2016 was USD 46.3 per ton, lower by 22% than it was in the same period last year. Coal sales volume in the first six months amounted to 13.1 million tons or 6% lower than it did last year. Lower average coal price and lower coal sales volume have led to lower total revenue by 26%, from USD 825 million in the first semester 2015 to USD 609 million in the same period this year. 

Gross profit margin in the period was booked 19% or slightly 2% lower than it was in the same period last year. Earnings Before Tax and Interest amounted to USD 59 million or 40% lower compared to the same period last year. Above all, the Company has managed to book a net income of USD 36 million throughout the period.  

In the first half of the year the Company has consistently applied a cost efficiency strategy covering mining operation, supply chain and logistic activities, and overhead cost reduction has lowered overall expense. In addition, the decline in oil price also helped the company curb the company’s mining operation and logistic cost.

The good news is that all global coal indexes showed since February an upward trend from its lowermost point.  This upward trend resulted from limitedly stronger coal demand in China and India as well as lesser output in Indonesia due to heavy rainfall. Such a coal price rebound is expectedly to give positive impact on the Company’s performance in the end of second half year. 

Throughout the first half of the year the Company has produced an output of 12.7 million tons of coal with total sales volume of 13.1 million tons shipped to China (3.2 million tons), Japan (2.2 million tons), India (2.0 million tons), Indonesia (1.8 million tons), Philippines (1.1 million tons), Thailand (1.1 million tons) and other customers in Europe, East Asia, Pacific, and Southeast Asia.

For 2016, production volume is targeted at 26.6 million tons while sales volume target has been set to 27.7 million tons.
 
To cope with low global coal price environment, the company will continue to deploy cost reduction program and prioritize the capex spending this year. 

As of the end of June 2016, total assets of the Company amounted to USD 1,113 million. The company has a total equity of USD 845 million and zero debt. The earning per share in this period was USD 0.03.

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